Key Findings from Frenkel’s 2011 National Law Firm Survey

Law firms are unique with respect to benefits programs. Medical plans in the legal industry are typically more generous—and far more idiosyncratic—than those of other employers. Frenkel Benefits, with the assistance of a large actuarial firm, recently completed a customized survey of more than 50 national law firms, with about 500 employees each, to determine this industry’s most critical trends.

Domestic partner and transgender coverage – More than 70% of law firms already offer domestic partner coverage. If state and/or federal tax law prohibits this extension of coverage, some firms are increasing employees’ gross incomes to cover the difference. Some law firms are even looking into coverage of transgender surgery.

Salary-banded contributions – Law firms are more likely to vary employee contributions with salary, so higher-paid employees pay more than lower-paid employees for the same coverage. Unlike other industries, this is fairly standard practice for law firms.

Family contributions – Law firms are increasingly charging a punitive rate for employees who wish to cover their dependents; beyond the cost of the additional coverage, the median family pays more than double the percentage of the premium rate of a single employee.

Self-insurance – Despite significant incentives to self-insure, law firms have been slow to move from being fully insured; only 50% of large (500+) law firms in our study were self-funded.

High deductible health plans (HDHPs) – In large part due to tax incentives offered to partners, 28% of law firms offer HDHPs, as opposed to 11% of other industry averages. When coupled with Health Savings Accounts (HSAs), HDHPs yield even greater tax incentives; 84% of law firms that offer HDHPs also offer HSAs.

Wellness programs – Surprisingly, law firms offer more wellness programming, such as health club discounts and screenings, than other industries. However, we believe that law firms are offering these programs as an employee perk more than a cost-reduction strategy.

Out-of-network benefits changes – Law firm employees tend to use more out-of-network providers than others, in part because of a lack of cost sensitivity. I addressed this in an earlier blog post. Because of changes to the carriers’ reimbursement schedules, lawyers may find themselves paying tremendously higher balance bills than a few years ago.

Again, the entire summary can be found here. What are your reactions to the trends we’ve observed in the legal industry? Do you expect other industries to follow the lead law firms are setting in areas like domestic partner coverage and implementation of HDHPs?

About Adam Okun

Adam Okun, ASA, MAAA, Executive Vice President
Adam Okun oversees compliance, financial reporting and manages a number of the largest client relationships at Frenkel Benefits. He has received national recognition as an expert in the financial implications of the Affordable Care Act, presenting to some of the largest global firms in the legal and accounting industries on the compliance, administrative and tax consequences of the legislation.
Adam joined Frenkel after spending his early years at a national consulting firm, advising large Fortune 500 clients on their health and benefits offerings and cost management strategies. He is an Associate of the Society of Actuaries (ASA) and Member of the American Academy of Actuaries (MAAA). Adam was on the Executive Committee of the Actuarial Society of Greater New York (ASNY) for four years and served as Acting Treasurer for two years. Adam is quoted frequently in business publications such as the Wall Street Journal, Bloomberg BNA, ABA Journal and Law360. Recent public speaking events include the WSJ webcast “What the Healthcare Law Means for You,” bSwift’s “Idea Exchange,” NJ State League of Municipalities Conference, the Actuarial Career Day at Columbia University and the recent Frenkel Seminar “Managing Law Firm Benefit Plans in a Challenging Environment.”

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Please be aware that this does not represent legal or tax advice and is only Frenkel's interpretation of the laws, regulations and statutes. It is highly recommended that you seek the advice of your legal and tax professional as to the applicability of this information to your particular situation.